The Estimation of the Cointegration Relationship between Growth, Domestic Investment and Exports: The Indian Economy

Zafar Ahmad Sultan, Md Imdadul Haque

Abstract

The paper examines the relationship between domestic investment, export and economic growth in India during 1970-71 to 2007-08. Using Johnson's cointegration methodology the study found the presence of a long term relationship between investment, exports and the economic growth of India. The study further shows that only domestic investment significantly contributes to economic growth both in the long run and in the short run. The export, though, has positive relation with economic growth, its contribution has not been found to be significant. The policy implication is that India should continue to focus on domestic investment while diversifying investment towards promoting export sector through investments in infrastructure.

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